Question
Blix Company is a family-owned company located in Tampa, Florida. The company produces designer handbags. The handbags are sold for $850. Selected data for the
Blix Company is a family-owned company located in Tampa, Florida. The company produces designer handbags. The handbags are sold for $850. Selected data for the companys operations last year follow: Units in beginning inventory 0 Units produced 250 Units sold 225 Units in ending inventory 25 Variable costs per unit: Direct materials $ 100 Direct labor $ 320 Variable manufacturing overhead $ 40 Variable selling and administrative $ 20 Fixed costs: Fixed manufacturing overhead $ 60,000 Fixed selling and administrative $ 20,000 1. Show the income statement presentation using the absorption costing method. 2. Show the income statement presentation using the variable costing method. 3. What would happen to net income under the absorption costing method if units sold changed to 125? (Show all of your work) 4. What would happen to net income under the variable costing method if units sold changed to 125? (Show all of your work)
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